Building on a Promise: Redeveloping North St. Louis

Activist: Barbara Manzara with the Northside Community Benefits Alliance was one of McKee's earliest opponents. (photo: Matt Sepic/ St. Louis Public Radio).
Organizing: North St. Louis residents and other activists gathered at Shining Light Pentecostal Church in August to protest the possible use of eminent domain. (photo: Matt Sepic/ St. Louis Public Radio)
Vera Turner is the assistant pastor of Shining Light Pentecostal Church. The 20-year-old building is on the list of properties developer Paul McKee wants to acquire. (photo: Matt Sepic/ St. Louis Public Radio)
(photo: Matt Sepic/ St. Louis Public Radio)
Andy Lowrey (left) and son Eric own Trojan Ironworks on North 25th Street. They make everything from stair rails to steel beams. Paul McKee wants to buy their building, and plans to help pay for this and other small businesses to relocate. (photo: Matt Sepic/ St. Louis Public Radio)
(photo: Matt Sepic/ St. Louis Public Radio)
Lilly Cage has lived on University Ave. in north St. Louis since 1974. (photo: Matt Sepic/ St. Louis Public Radio)
Eric Little, 20, grew up in the proposed redevelopment zone. He was part of a protest against Paul McKee's request for nearly $400 million in tax-increment financing. (photo: Matt Sepic/ St. Louis Public Radio)
Paul McKee's companies have been buying properties on the near north side since 2003. This one, on College Ave., will be demolished next year if city officials approve McKee's redevelopment proposal. (photo: Matt Sepic/ St. Louis Public Radio)
The St. Louis Commerce Center, which covers six blocks along Martin Luther King Dr., was built early this decade with the help of $1,045,600 in brownfields remediation tax credits. McKee has not said what he wants to do with this particular property, but his plans show it will be a "mixed use" area. (photo: Matt Sepic/ St. Louis Public Radio)
The proposed Northside Redevelopment Area includes much of Alderwoman April Ford-Griffin's fifth ward. "For people who say 'why would you work with Paul McKee?' Well, who else is there?" says Ford-Griffin. (photo: Matt Sepic/ St. Louis Public Radio)
In the 1950s and '60s, thousands of people lived in 33 high rises at the Pruitt-Igoe public housing complex.
In the early 1950s, 57 acres on the southeast corner of Jefferson and Cass Avenues were cleared of what was considered to be slum housing to make way for Pruitt-Igoe. The first residents moved there in 1954.
Doomed to fail: Pruitt-Igoe's common corridors, first thought to be an innovation that would build community in the public housing complex, quickly deteriorated.
Jill Mason holds photos of her First Communion at the former St. Bridget Church. Mason's family was one of the first to move into the new Pruitt housing project in 1954. She still lives in the area and finds herself within the footprint of Paul McKee's redevelopment plan. (photo: Matt Sepic/ St. Louis Public Radio)
Today there's scant evidence of the thousands of people who once lived in Pruitt-Igoe. (photo: Matt Sepic/ St. Louis Public Radio)
(photo: Matt Sepic/ St. Louis Public Radio)
(photo: Matt Sepic/ St. Louis Public Radio)
Man with a plan: Developer Paul McKee wants to rebuild more than two square miles of north St. Louis. He says a public-private partnership is the only way such a vast project can work. (photo: Matt Sepic/ St. Louis Public Radio)
(photo: Matt Sepic/ St. Louis Public Radio)
Development is already underway in the Old North St. Louis neighborhood, but it is not part of Paul McKee's plan. The $36 million face lift for North 14th street near the landmark restaurant Crown Candy will include commercial and residential space along two blocks. (photo: Matt Sepic/ St. Louis Public Radio)
North 14th street was turned into an outdoor pedestrian mall as part of an earlier revitalization attempt in the 1970s, but the area continued to deteriorate. Construction equipment sits on the site today, but eventually the street will reopen to traffic. (photo: Matt Sepic/St. Louis Public Radio)
Urban prairie: While parts of north St. Louis have already benefitted from extensive smaller-scale rehabilitation efforts, much of the area Paul McKee wants to develop includes empty city blocks.
A 1996 satellite image shows Paul McKee's signature WingHaven development when it was still a Monstanto research farm. (photo: Google Earth)
The Winghaven site today. (photo: Google Earth)
MasterCard's decision to locate its headquarters at WingHaven was key to the project's success. (photo: Rachel Lippmann/ St. Louis Public Radio)
New homes are also a key component of WingHaven. (photo: Rachel Lippmann/ St. Louis Public Radio)
A lake at WingHaven. (photo: Rachel Lippmann/ St. Louis Public Radio)
The golf course at WingHaven. (photo: Rachel Lippmann/ St. Louis Public Radio)
Official Documents
Despite his ambitions, McKee has a long way to go to overcome financial and political barriers - By Adam Allington, St. Louis Public Radio

The language of urban development can be kind of confusing, with the acronyms and different financial mechanisms, but when you get right down to it, it's not so hard to grasp.

Developer Paul McKee wants to spend $8 billion to rebuild part of north St. Louis. A key part of his plan relies on something called "Tax Increment Financing," commonly referred to as TIF.

Now, say that I'm a developer and I want to build a shopping center in a part of town that really needs the jobs, I approach the mayor, played here by my colleague Maria Altman.

Maria: "Hi there."

Adam: "So, Maria…to get this shopping center off the ground I am going to need some cash."

Maria: "How much cash?"

Adam: "Well for starters…lets say about $20 million."

Maria: "What? We don't have $20 million."

Adam: "Now, don't worry, I'm not asking the city to front the money…but if you'll just sign this TIF contract and agree to be my backer...I can raise the money on the bond market."

Maria: "Ok…but what happens if the bond market isn't buying, or your shopping center goes belly up?

Adam: Don't worry, we've crunched the numbers and we're like…75 percent sure this project will be huge…seriously, its practically a done deal.

Maria: Well...if you're so sure, I suppose so.

Adam: Thank you very much.

OK, so what we'll do is we'll take a portion of the taxes created by my shopping center over time—this is the increment—and we'll slowly pay back those investors and since the city's not getting much tax from this property now anyway, it won't miss what it doesn't already have.

But St. Louis TIF Attorney Bill Kuehling says these kinds of arrangements, where the city backs bonds for a private development, are not that common.

"Well it is rare for a good reason because at times it ends up being called up to be paid and the city is on the hook for the repayment," notes Kuehling.

Kuehling says that is exactly the spot St. Louis still finds itself after the city agreed to back $15 million in bonds for the ill-fated St. Louis Marketplace strip mall.

"That was one of the first the city ever did, the city agreed to back it up with their general fund. And what happened there was a lot of changes in retail occurred and a lot of spaces went vacant," said Kuehling.

St. Louis is also on the hook for $13.6 million to cover the shortfall from the TIF-funded Renaissance Grand hotel, and $14.5 million for St. Louis Centre, formerly owned by the now-bankrupt, Pyramid Companies.

Now, developer Paul McKee is asking the city to back $200million in city-backed loans to kick start his north side project. Many aldermen say they like his vision but are reluctant to put the city's credit on the line yet again. But McKee says his project is different.

"We want to bring jobs back into the city, that's what we do," said McKee.

"So, you can't do that without some major land areas to do that. So that's what really differentiates us from everything else—we have the land and we want to bring jobs, and the housing will follow."

McKee predicts property values in the development zone will quadruple over three decades. But others question his math.

"Those were the old days, we're talking about the new days now," said business analyst Juli Niemann. She said the amount of money McKee would need to borrow just isn't available any more.

"Bottom line, there is very little resale value in most of the properties that he has acquired," Niemann said. "Given the current status of real estate, no lender is going to go in there and give you loans on what you estimate the property is worth, it's ‘what is the resale value?'"

But St. Louis developer Mike Roberts, who is not involved in McKee's project, said many urban development projects begin during recessions.

"In the timeline it takes for him to get these properties back on their feet, the development of downtown will continue to grow," Roberts said. "Residential will continue to develop downtown and what we'll see is a gradual growth in the core of St. Louis, which will be positive [For McKee]."

Until now Paul McKee has been relatively spare with the specifics of his project, speaking instead about an overall vision of green buildings, open space, and high-paying jobs.

As he begins the process of pitching his ideas to city officials at next week's TIF Commission meeting, he'll have to convince them that his ideas are fundable and in the best interest of taxpayers, or risk, as he says, "becoming the biggest slum lord in the Midwest if this plan doesn't fly."

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